Washington – The IMF board approved $2.77 billion in emergency aid for Egypt on Monday, to help the country deal with the impact of the coronavirus pandemic, but said the government will need more financial help.
The country had seen a “remarkable turnaround” prior to the COVID-19 shock, under a fund-supported economic reform program, but that progress is now threatened, a statement from Geoffrey Okamoto, First Deputy Managing Director and acting IMF Board Chair read in part.
“The COVID-19 pandemic has drastically disrupted people’s lives, livelihoods, and economic conditions in Egypt. The global shock has resulted in a tourism standstill, significant capital flight, and a slowdown in remittances, resulting in an urgent balance of payments need,” he said.
“Government of Egypt has responded to the crisis with a comprehensive package aimed at tackling the health emergency and supporting economic activity. The authorities acted swiftly to allocate resources to the health sector, provide targeted support to the most severely impacted sectors, and expand social safety net programs to protect the most vulnerable. Similarly, the Central Bank of Egypt adopted a broad set of measures, including lowering the policy rate and postponing repayments of existing credit facilities,” he added.
According to Okamoto, the emergency support under the Rapid Financing Instrument will help limit the decline in international reserves and provide financing to the budget for targeted and temporary spending, aimed at containing and mitigating the economic impact of the pandemic.
“The authorities are committed to full transparency and accountability on crisis-related spending including through publishing information on procurement plans and awarded contracts, as well as ex-post audits of such spending,” he said.
He revealed that additional expeditious support from multilateral and bilateral creditors will be needed to close the remaining balance of payments gap, ease the adjustment burden, and preserve Egypt’s hard-won macroeconomic stability.
On her part, Kristina Georgieva, the IMF Managing Director said the fund has received over 100 requests for aid from its members, and that developing countries will need about $2.5 trillion to deal with the impacts of the pandemic. Last week the fund said it had approved 50 such loans.
Egypt has suffered over 500 COVID-19 fatalities with nearly 10,000 cases, according to John’s Hopkins University’s tally.
The country has gradually started to reopen after President Abdel Fattah al-Sisi’s government has loosened a strict curfew for the Muslim holy month of Ramadan in an effort to kickstart North Africa’s largest economy.